Court's Anti-Spam Ruling Defines 'Opt In'

A recent anti-spam ruling in New York could have serious ramifications for the e-mail list industry.

State Supreme Court Justice Lottie E. Wilkins said in a Jan. 6 ruling that MonsterHut Inc. and its officers Todd Pelow and Gary Hartl fraudulently represented their e-mail marketing efforts as permission-based.

The court also enjoined the now-defunct MonsterHut, formerly of Niagara Falls, NY, "from further engaging in any of the fraudulent, deceptive and illegal acts and practices pertaining to representations of 'opt-in,' 'opt-out,' or the 'permission based' nature of their protocols or the collection and use of their e-mail data."

The court also rejected MonsterHut's argument that it ought not be liable because it obtained the lists from third parties who claimed the lists had been "opted in."

A conference is set for Feb. 11 to determine, among other things, whether MonsterHut will be ordered to pay damages.

State Attorney General Eliot Spitzer sued MonsterHut in May, alleging it had sent more than 500 million e-mails since March 2001 and falsely claimed to consumers that they had "opted in" to receive the e-mails. More than 750,000 consumers asked to be removed from MonsterHut's list, and more than 40,000 consumers complained, Spitzer's office alleged, though it did not make clear to whom they complained.

Spitzer's office contends the MonsterHut issue was one of fraud.

"When they [marketers] make a promise, it must be factually accurate," said assistant attorney general Stephen Kline of Spitzer's Internet Bureau. "Where [the ruling affects marketers] is not necessarily that they have to go about changing their practices in how they collect e-mail addresses. They just have to be specific and clear about the way they describe it. The problem with MonsterHut was one of disclosure."

But one land mine for marketers in this ruling may lie in the definition of opt in. Spitzer's office argued "in an 'opt-in' protocol consumer e-mail addresses are collected and used only if the consumer affirmatively approves such collection. For example, a consumer must mark a box indicating the desire to allow use of his or her e-mail address.

"Adversely, under the 'opt-out' protocol, consumer e-mail addresses are collected so long as the consumer has not specifically declined such collection by an affirmative act, for example by the consumers [sic] failure to remove a check mark from a box which contained such a marking by default," the ruling said.

"This puts the onus on the mailer to take responsibility for the lists they're using. They are as liable as the list owner and manager," said Jay Schwedelson, corporate vice president at list firm Worldata, Boca Raton, FL. "It also clearly defines, or attempts to define, what 'opt in' means, which would create somewhat of a standard for the language that the industry doesn't currently have."

Indeed, it is fairly common among marketers to pre-check permission boxes on their Web site sign-up forms and claim their files have been opted in. Many marketers think address collection is too arduous when consumers have to check a box to give permission.

Further, direct marketers generally define opt-out marketing as contacting a consumer who has no previous relationship with the marketer, and continuing contact unless the consumer explicitly indicates he or she wants no further contact.

At the same time, it is an increasingly popular tactic among spammers to include a line in their e-mails saying something along the lines of "you are receiving this because you opted in at one of our partners' Web sites" when it's a safe bet no such thing happened.

"I think it's not intentional 100 percent of the time. I think it's just clueless people," Michael Mayor, president of New York e-mail list management and development firm NetCreations, said of misleading opt-in claims.

Increasingly, e-mail lists are represented as opted in when it is unclear what the people on the list opted into, he said.

"[Opt in] implies that they [the list owners] have direct permission from the list member to mail third-party e-mail to them. That's not how the term is being used in this industry," he said. "In eight out of 10 cases, 'opt in' is being used as a generic green light that these people will accept mail from anybody."

Mayor, who also heads the trade group Interactive Advertising Bureau's e-mail committee, said marketers who rent e-mail lists should get assurances in writing from list owners that files are permission-based, and that permission was granted for the type of marketing the buyer plans.

He said that the industry overall is headed toward more permission-based e-mail marketing. But the main driver behind the shift is that e-mail marketers increasingly must prove to Internet service providers' satisfaction that their lists are permission-based to get through ISPs' spam filters.

"What's pushing us there is ISPs and [spam] blocking issues, not necessarily government action," Mayor said.